Defense industry news, analysis and commentary

If you take the Administration’s word for it, the most recent defense budget represents a sober-minded and far-thinking strategic shift from the Middle East to Asia, creating a smaller, high-tech force oriented increasingly towards inter-state conflict and deterrence. Many are even comparing the Pentagon’s current vision with that of former Secretary of Defense Donald Rumsfeld, who sought to transform the five-sided building away from Kosovo-style interventions and create an agile and sophisticated military oriented toward the Pacific.

On the surface, the budget does seem to reflect an Asia “pivot” even though it represents an 8 percent reduction from the planned $571 billion in 2013 defense spending set last February. As defense dollars contract, the budget ostensibly protects the Navy’s 11 carrier fleet (although the Navy does not yet know how to pay for all 11), the Air Force’s next-generation bomber, and extends the buying cycle of the Joint Strike Fighter instead of reducing procurement. The highest profile programs, for the most part, escape serious cuts. Yet, the budget clocks in with $45 billion in spending reductions. Where did that money come from, and which services won and lost? Conventional wisdom holds that the Navy and Air Force escaped the budget drill mostly intact while the Army endured the bulk of cuts. But the truth is that all of the services are shrinking and aging under the Obama budget.

Laying Off 100,000 Soldiers and Marines But No Civilians

The Army is probably the most visible target of spending cuts. Gone are 80,000 active duty soldiers over the next six years and a minimum of eight brigade combat teams, with potential changes to brigade combat team composition also ahead. It is tough to overestimate the impact of these reductions in force. The Army has been stretched incredibly thin over long counterinsurgency operations in Iraq and Afghanistan. Getting the smaller Army back in balance will more difficult to achieve and take longer under new spending plans.

The Army was also hit hard in procurement, with its M1A1 Abrams upgrade and Stryker vehicle program taking 84% and 57% cuts in planned spending, respectively. The one area where the Army did better relative to the other services was in the Operations and Maintenance account. Army O&M funding, which increased nearly 16% from the FY 2012 request, includes more money for maneuver training (although Army range modernization was cut steeply by over $5 billion), ISR logistics support and depot maintenance.

Overall, these Army cuts create real strategic vulnerabilities. As much as the administration might like to wish away potential threats, getting rid of America’s capacity to conduct a protracted ground campaign does not make such a scenario any less likely. The past ten years have shown the enemy will find a way to adapt to America’s perceived vulnerabilities. If lengthy ground wars are perceived as undesirable by America, it is a safe bet that our adversaries will try to take advantage.

Meanwhile, the Marine Corps is busy planning for endstrength cuts beyond those already announced as part of the 2013 budget. Under consideration is the elimination of another infantry battalion and reducing some light armored reconnaissance capability.

Pentagon plans now retire seven cruisers and two dock landing ships at the same time as the Navy is revising downward its 30-year shipbuilding plan. Military leaders have been quick to point to the ten ships planned for construction over the next fiscal year. The problem is that this figure, as it appeared in the FY 2012 budget, was supposed to be thirteen, not 10. In fact, in the 2012 budget, the Navy requested 57 ships from 2013-2017. The new 2013 budget cuts this to 41 ships. It’s hard to see how these dramatic cuts in fleet size fit into the administration’s pivot to Asia.

Naval research and development do not fare much better. While the Navy is to be commended on a getting some research initiatives right — such as breaking out a new account for Future Naval Capabilities focusing on advanced research and prototypes, increasing funding for the Littoral Combat Ship, and increasing funding for the Marine Corps’ Assault Vehicles — many of the Navy’s RDT&E decisions do not appropriately resource the rhetorical emphasis on the Pacific.

The budget slices the Power Projection Applied Research account by nearly 15%, affecting programs like precision strike and directed energy weapons. Similarly, Force Protection Applied Research dropped by 27%, cutting innovation in anti-submarine warfare and hull assurance. A 28% cut in Electromagnetic Systems Applied Research affects initiatives such as electronic attack, surface-based anti-cruise and ballistic missile defenses, and the Surface Warfare Improvement Program, or SEWIP, which uses electronic warfare to disarm incoming missiles.

They are exactly the type of programs the Pentagon should be protecting if it is serious about emphasizing the unique challenges of the Asia-Pacific. The fact that R&D money declined for these particular Navy programs is a disturbing sign for the overall coherence of the administration’s budget.

While the Navy received a $4 billion increase in O&M funding from 2012, it could not come soon enough. The Navy has been stretched past the breaking point in terms of operational readiness, with nearly one quarter of its ships failing their annual inspection in 2011 and cracks in the aluminum superstructure of every cruiser in the Navy’s inventory.

The naval readiness crisis was so bad in 2011 that Vice Admiral Kevin McCoy told the House Armed Services Committee that, “we’re not good to go.” Increased O&M funding for the Navy helps, but more needs to be done in order to fix the fleet. It certainly does not help that the Navy is forced to pay nearly $900 million to retire ships early while the fleet size is already too small.

Various defense officials and military chiefs have testified recently that the services are sacrificing size of the force for either readiness or quality. Given the rapidly rising levels of risk associated with the latest defense budget cuts, it is likely both readiness and quality will decline despite the Chiefs’ best efforts.

While the Navy gets some things right in the new budget, it is hardly the unambiguous winner of the conventional wisdom. The Navy is making real sacrifices — both in terms of fleet size and future innovation — that may come back to haunt it.

The Air Force Is the Biggest Bill Payer … Again

Undoubtedly, the U.S. Air Force is the biggest victim in this round of defense budget cuts. The Army and the Navy plan to buy more aircraft than the Air Force next year. Over the next five years, the Air Force plans to buy nearly 200 fewer aircraft than it said it needed just a year ago. The budget eliminates seven fighter squadrons and retires over 300 aircraft early, including many new C-27s and Global Hawk drones. At a time when the United States is flying the smallest and the oldest Air Force in its history, some of the budget choices for air power do not add up.

The budget cuts over 50% from 2012 planned procurement levels of MQ-1 and MQ-9 drones. It also buys 40% fewer C-130J transport planes than in FY 2012. The C-130J cuts are especially puzzling because as many overseas bases are expected to close due to force structure cuts, tactical airlift will only become more important to deliver U.S. forces quickly to troubled regions of the world.

The Air Force budget also features surprising R&D cuts. The service has reduced research funding for both unmanned vehicles and reconnaissance systems — highly networked programs that seem to fit into the administration’s focus on conducting counterterrorism and modernizing to maintain the balance of power in Asia. Additionally, the request cuts a large amount of funding for directed energy weapons across several accounts, as well as electronic warfare capabilities. Other R&D cuts slow down the F-35 Joint Strike Fighter, a modernization program absolutely essential to the future strength of the Air Force. The budget also reduces by 15 percent America’s already dilapidated nuclear modernization program.

Unmanned vehicles are also not spared the axe in the new budget. Directed energy weapons are widely thought to be a growth area that will be increasingly important as conventional enemies amass ever larger missile inventories. But big reductions are in this year’s budget for high energy laser research and the high energy laser advanced technology program, which was zeroed out.

All three of the Air Force’s bomber platforms suffer cuts of over 40 percent. Cuts to bomber development hardly make sense given that long-range strike is desired by Pacific commanders who fear that their forces may be locked out of the skies along the Asian littoral. While the next-generation bomber is an important step, America needs intermediate programs that can bridge the gap until the next generation arrives.

Obama Administration Changing the Rules of the Road: From Hard to Soft Metrics

Since the latest defense budget simply does not match the goals or objectives of the newest defense guidance, the Pentagon is becoming increasingly crafty in how it presents information to paint a rosier picture. As the much-lauded shift to Asia turns out to look more like a “paper pivot” based on emphasis by reduction, the Administration is busy changing long-standing metrics. This shift from the quantifiable and tangible to qualitative and soft metrics is an attempt to thwart forthcoming criticism of a pivot that claims to emphasize air and naval power while the budget shrinks the U.S. Navy and Air Force. By claiming an apples-to-oranges comparison, the Administration and Pentagon leaders will try to mask the realities of diminishing capabilities, their negative consequences and inability to match strategic objectives.

Changing the definition of what constitutes U.S. power and presence abroad more subtly from tangibles to qualified activities is the perfect solution to a budget that cuts U.S. overseas presence and infrastructure, reduces the number of those in uniform, and lessens what they’re able to do around the world each day. By changing how Congress traditionally measures presence from hard to soft, defense officials can claim a false comparison in response to any concerns that President Obama is leading a draw down that is too steep, leaves allies in a lurch, or abandons traditional security agreements and commitments.

But it remains impossible for the Obama administration to square the circle: the military cannot maintain or increase its rotational requirements with a smaller force and shrinking capacity. At least, not without tremendous pain, consequence, threat of mission failure and risk to those in uniform.

Squishy Definition of U.S. Overseas Presence Coming

A recent press article by John Bennett at U.S. News & World Report noted that the Obama administration “is ushering in a new era in which the meaning of what constitutes a U.S. military presence in some corners of the globe will look very different than it does today.” In his January 5 budget briefing, Secretary Panetta previewed the shift from one focused on overseas bases, permanently-stationed units, air and naval fleet sizes to one that will highlight rotational deployments and participation in military exercises.

The kinds of changes include removing permanent units stationed overseas to forces rotating through a given country or region for brief periods of time. Troops are expected to undertake short-term assignments for periodic training and exercises to offset the loss of forces in Europe, for example. The new budget also assigns an Army brigade combat team with each regional Combatant Commander to maintain cultural and language expertise. However, this is not an ongoing presence like having a carrier home ported in Japan. Rather it could be a short duration rotation with a small unit or larger military exercise that ends quickly.

Trying to Change How The Navy Counts Ships

As the Navy prepares to officially drop its 313-ship fleet size goal, leaders are also considering changes to how the Navy counts ships. Coast Guard cutters, for example, may be counted in future Navy shipbuilding plans to artificially prop up the numbers.

As all of America’s armed forces shrink under the latest budget proposal, the rebuttal is often made that because the military has such capable systems now, a smaller fleet of ships, aircraft and vehicles is just as effective as bigger but older ones. Navy leaders have been noting that the increasing capabilities of systems and U.S. ships help offset a reduction in total numbers.

As colleague Bryan McGrath has said, “…the suggestion that networks and precision guided munitions make hull counts unimportant points again to the basic physics problem that naval planners have faced since the Phoenicians — a ship can only be in one place at a time. Quantity does have a quality all its own, and … networks and PGM’s are of incalculable value when the Navy is fighting; however they are less important when the Navy is doing what it does the vast majority of the time — deterring and assuring.”

Reality does not change as one ship, one air wing or one brigade combat team can only be in one place at one time around the world. Even with sophisticated technologies and systems in the military, numbers still matter. Often overlooked is that America’s military does more than fight. Because U.S. economic growth is connected to the stability and prosperity of the global economy, the nation uses its naval capabilities to protect sea trade, thereby ensuring all maritime assets may transit freely and safely.

White House and Senate in No Hurry to Help the Military

The 2013 defense budget request spreads pain across the uniformed services, components, personnel, states, and industries. Congress is unlikely to pass any defense budget that will be signed into law before the start of the fiscal year. This means for the third year in a row, the Department of Defense will have to start the budget year frozen at last year’s funding levels and restricted by the implications of a continuing resolution (CR): no new program starts and no expansion of existing programs allowed.

The unique and negative consequences of operating under a CR and the uncertainty of knowing when the Department will have cash on hand have created significant and avoidable problems for the U.S. military over the past two years. Back in 2011 when the government almost shut down, the military did not receive its formal budget until six months into the fiscal year. But the damage had already been done.

Because Congress did not pass a defense budget on time the past two years, the Navy was forced to shorten the notification time for sailors scheduled to change duty stations from 4-6 months to 2 months or less. Navy maintenance ashore was neglected as a result of the funding freeze and uncertainty and various shipbuilding repairs were canceled outright.

The Army had to impose a temporary hiring freeze for its civilian workforce during that time. Entire production lines at the Red River Army depot in Texas and the Letterkenny Army depot in Pennsylvania were threatened for shut down during the 2011 debate.

Meanwhile, the Air Force was considering the possibility of grounding some of its F-15E fleet due to funding shortfalls. 36 military construction projects were deferred for the Air Force as a result of the budget impasse. New Chinooks for Army troops and new Reaper drones for airmen in Afghanistan all had to wait on hold until Congress could pass a defense budget.

The Specter of Sequestration

The problem this year, however, goes far beyond the challenges of more reduced funding for DoD and operating under a CR. The President and Senate leaders currently have no serious or viable plans to avert sequestration before a lame duck session of Congress come winter. Pentagon leaders will begin planning for sequestration this summer and yet another new strategy exercise will have to be undertaken. What few politicians are discussing is the likely outcome of continued divided government and an election that does not provide a clear mandate for either political party. The odds of sequestration taking effect grow by the day.

While various members of Congress have introduced legislation to replace the sequestration cuts with reductions elsewhere — including House Armed Services Committee Chairman Representative Howard “Buck” McKeon (R-CA) whose bill has over 70 co-sponsors — President Obama has repeatedly promised to veto any plan to change sequestration’s impact on the military without tax hikes included in the package. Senate Majority Leader Harry Reid (D-NV) and Senate Armed Services Committee Chairman Carl Levin (D-MI) support the President’s plan to force ever more military spending cuts in exchange for taxes going up.

The military’s budget will become hostage to Washington’s lame duck debate that will center around Bush tax cuts expiring, another vote to increase the debt ceiling, and various other bills expiring like transportation and agriculture. Congress can, of course, do nothing until January 2013 and then follow the solution just passed to extend the payroll tax holiday: debt finance sequestration’s impact on the military. The problem is that consequences will begin showing long before January in the military, among the DoD civilian workforce, and within America’s shipbuilding and aerospace manufacturing workforce.